The Poverty Line Isn't a Vibe
A more robust welfare state won't change the fact that tradeoffs exist, even for relatively wealthy Americans who choose to have kids.
Wall Street strategist Michael Green caused a stir on social media last week with his outlandish claim that the federal poverty line should be raised to cover individuals earning as much as $140,000 annually.
That claim, which Green made on his Substack and subsequently in The Free Press, has been widely debunked by the likes of Scott Winship, Jeremy Horpedahl, Noah Smith, and Tyler Cowen (whose article pointing out Green's errors was published, somewhat hilariously, in The Free Press too).
And yet, somehow, Green returned.
In a follow-up post on Substack, Green argued that "the point" of the original article "was not the accuracy of the actual $140K claim." He goes on to concede that his many critics were right that both his math and his geography were flawed—the original article was premised on the cost of living in Essex County, New Jersey, which lies in one of the most expensive metropolitan areas in the country.
So, then, what is the point? Green argues, essentially, that many middle-class families simply feel more economically stretched today than they did in the past, so much so that traditional measures used to define poverty are meaningless today.
But the federal poverty line is not a vibe. Even relatively wealthy people can feel economically stretched without being in such dire need that it requires federal intervention—which is what Green is ultimately arguing for with all of this. He's retreated from the mott to the bailey by abandoning the $140,000 figure, but there are still some major problems with this argument.
First, he repeats an error from the original piece, which asserted that the poverty line functions as a gateway to the middle class. That's never been true. Yet, throughout the follow-up post, Green continues to equate the two things.
Like in fictional towns where all the children are above average, this simply doesn't make sense. Not every family will be able to afford the median apartment; that's what makes it the median apartment. And while it is certainly true that even relatively wealthy people can feel financially stretched at times, that's hardly the same thing as being in poverty.
For example, as Smith pointed out in his debunking of Green's original post, about 14 percent of American children have living situations with more than one person per room, which is considered "overcrowded." That's what living in poverty looks like. But Green is determined to redefine poverty to mean something like "middle-class families should never have to face challenging tradeoffs."
Unfortunately, tradeoffs are part of life.
The best example of this error comes late in Green's follow-up post, and it is quite revealing. He writes that many middle-class Americans feel stretched because a lot of their wealth is tied up in their mortgages. There's a nugget of truth to this, since you can't realistically use your home's equity to pay bills.
But from there, Green makes a crazy leap. "But if the home you live in goes from $200,000 to $1,000,000, you are not wealthy, because the replacement home also costs $1M," he writes. "You are trapped. You cannot sell the house and take the profit, because you still need a place to sleep, and the house across the street also costs $1,000,000."
That is nonsense. If you own a $1 million home, you can absolutely sell the house and buy another house for $500,000 or $800,000. Yes, that might be a smaller house, but tradeoffs exist. Perhaps you could even buy a cheaper, nicer house in a lower-cost-of-living area. Green even acknowledges that one of the ways to realize the wealth in a home is to "downsize" by moving "to a cheaper region, sacrificing income/opportunity/quality of life."
So he does know tradeoffs exist! He just believes the federal government (that is, taxpayers) ought to eliminate them for people earning six figures.
The decisions and tradeoffs about where to live will reflect different preferences for different people, but this is absolutely not evidence that people living in million-dollar homes are in "poverty." Never mind the fact that it's also quite silly. Really, I encourage Green to visit any town outside of the top 10 wealthiest metropolitan areas in the country, walk into the first bar he finds, and tell the patrons inside that a million-dollar home is a "trap" and that the owners of those houses are "not wealthy." The bar's patrons will have a good laugh.
A big part of the problem with Green's analysis is that he leans heavily on the Cost of Thriving Index, published by American Compass executive director Oren Cass. That index purports to show that it takes more than 62 weeks for the median male worker to earn enough to pay for everything a modern American household requires. There are, of course, only 52 weeks in the year, so Cass and Green say this proves the existence of a problem.
But Cass' index is deeply flawed—Green even acknowledges one excellent debunking by Winship. Cass' analysis does not take into account taxes and various family-oriented subsidies delivered via the tax code. We don't need to raise the poverty line to provide welfare to the middle class, it turns out, because the middle class is already getting a lot of welfare. Excluding that obviously makes the beneficiaries of those programs appear worse off than they really are.
With those included, the so-called "cost of thriving" for families with a single male breadwinner has actually fallen since 1985, according to Winship's analysis of Cass' figures.
Cass' study also ignores the crucial role that women now play in the workforce. Including them in the overall assessment means that the cost of thriving has fallen by about 7 weeks since 1985, in part because women have seen bigger gains in earnings during recent decades. It is quite foolish to focus exclusively on male workers' earnings in the year 2025.
A huge part of the economic strain that Green describes revolves around the cost of child care, so let's take a moment to address that. Yes, child care is expensive, and even more so in many places where it is already expensive to live, even without kids. No, this is not a good reason to regard those earning well over six figures as being in poverty, for at least three reasons.
First, all choices come with tradeoffs, and having kids is no exception. Indeed, having children is one of the most momentous choices that two people can make. That it comes with huge tradeoffs is not a surprise and does not require rethinking huge swathes of federal policy. If new parents feel poor, it's probably because they are significantly less well-off financially than they were before—but the payoff from having kids, as so many parents have assured me, is not to be measured in dollars and cents anyway.
Second, Green extrapolates the most costly years of child care (the first few) and assumes parents will face that burden forever. "Rather than considering families' general cost of living over time, Green's analysis focuses on the most difficult years for expenses," writes Cowen in his debunking of Green's initial post. "No wonder it is so pessimistic."
Finally, there are plenty of things that could (and should) be done to lower the cost of child care, from easing zoning laws to allow more day cares to removing nonsensical licensing laws that, in some cases, require day care workers to have college degrees. Supply-side reforms will make child care more accessible and affordable, and they will create more jobs.
On the other hand, the expansion of the federal safety net that Green is gesturing toward will have the opposite effect. Giving middle-class and upper-middle-class families more money to spend on child care will only create higher demand on a system that's already facing a supply crunch. That will make the problems he is describing worse.
And, as a political matter, promoting this sort of economically illiterate populist nonsense that equates routine tradeoffs with abject poverty will only lead to terrible places. Conservatives used to tell people to take control of their lives and make better choices. Now, populists like Green are promising handouts to objectively wealthy people based on their feelings of being poor.
But further subsidizing the lifestyles of families earning six figures and living in million-dollar homes will not make housing, child care, or any other aspect of a middle-class life more affordable. It will inflate prices, place a larger burden on taxpayers, and make it even more difficult for those actually experiencing poverty to reach the middle class and beyond.
